Building on the Budget at the end of last year, national targets still frame the political narrative. Across the development sector, however, there is growing doubt about how realistically those targets can be met.

In recent months, they have faded from serious industry discussion, reflecting wider concern around market confidence, scheme viability and delivery risk. Rising costs, slowing build programmes and planning uncertainty are reshaping not only what gets built, but how it gets funded.

Rising costs, construction delays and labour shortages

Development has become more complex and risk-heavy. Labour shortages continue to disrupt build programmes, pushing projects beyond original timelines, while material and trade costs remain elevated.

These pressures often create knock-on effects, including redesigns, planning changes and rising professional and holding costs. Together, this makes schemes harder to manage, more expensive to deliver and increasingly difficult to fund.

For many developers, this means projects are now falling outside the risk appetite of mainstream lenders, whose models depend on clear certainty around cost, timescales and delivery. Where schemes might once have fitted comfortably within traditional criteria, even experienced developers are now finding that their projects no longer meet standard funding requirements.

By contrast, specialist lenders are equipped to assess more complex risk profiles and structure funding around uncertainty rather than fixed assumptions. Over the past year, lenders’ limits have been enhanced, with many flexing their risk appetite in response to current market conditions., providing a larger proportion of total project funding as a result. This level of support is helping schemes remain viable despite inflationary pressures, extended timelines and tighter margins.

Planning uncertainty and the limits of mainstream finance

Alongside construction risk, planning has become one of the biggest barriers to delivery. Inconsistent decisions, long determination periods and more frequent planning changes are making timelines harder to predict and making developers more cautious about committing capital.

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At the same time, land with planning permission continues to command a high premium, even as the probability of delay has increased. Developers with profit margin challenges are committing more of their own capital earlier in the lifecycle of scheme without knowing when construction will realistically begin.

This combination creates a funding gap that mainstream lenders are often unable to fill. Specialist lenders are increasingly stepping into this space, supporting schemes with complex or unresolved planning positions, uncertain delivery routes and non-standard structures. Speed of execution, flexibility of terms and a bespoke approach to risk are now key reasons developers are partnering with specialist funders.

The expansion of bridging products to support early-stage land acquisition, including sites without planning permission, reflects this shift. These facilities are enabling developers to secure opportunities quickly and begin progressing schemes while longer-term development strategies are formed.

What needs to change to unlock housing supply

If housing delivery is to accelerate, funding structures need to reflect the realities of modern development, rather than idealised assumptions.

Earlier lender involvement is critical. Bringing specialist funders in at the land or pre-planning stage allows schemes to be structured around real-world risk from the outset. This leads to more realistic appraisals, stronger viability assessments and helps issues be identified before they disrupt delivery.

Flexible drawdown structures are equally important. With build programmes becoming less predictable, development finance needs to adapt to changing timelines, phased delivery and cost movement. Specialist lenders are responding by offering more flexible facilities, supported by a relationship-led approach that prioritises ongoing communication as projects progress.

Specialist finance is also supporting a wider range of delivery routes, including regeneration, renovation and conversion projects. Bringing underused buildings back into use often involves planning complexity and non-standard risk, but with the right funding in place, it provides a practical way to deliver homes more quickly.
Housing targets alone will not unlock supply. Progress will depend on practical measures that align ambition with delivery.

In the current environment, specialist development finance is no longer a niche solution. It is becoming fundamental to turning housing ambition into homes on the ground.